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Superfunds February 2015
SuperStream is fully implemented. We will also
need to determine where, with increased use of
technology, particularly on the disclosure and
advice side, and what the savings will untimely
be. There are many cost ‘buckets’ and research
shows that some areas, such as insurance claims
assessment and basic operating expenses, have
increased per member over the last couple of
years. How do we reduce them? Each bucket
must be looked at, not just investment fees.
Answering these questions is not easy today,
because of the lack of quality granular data. But
that data is improving and we must continue
to take steps to improve it further. The industry
has been given notice: we have five to six years
to show the results of our work. I firmly believe
that the only way we will increase confidence in
the industry and improve our credibility with our
political and consumer stakeholders is by lifting
the lid on every cost bucket. We must be bold and
we must come up with the solutions.
There are 44 recommendations in the FSI
final report, 28 of those have the potential to
directly impact the superannuation system.
David Murray has urged all political parties to
implement all the recommendations as a single
package. It was no surprise, but still very pleasing
to read the recommendations to change the
superannuation system to focus on providing
income streams to supplement and replace the
Age Pension. It did recognise that we need to
wait until 2020 before we can really see and
asses the impacts of the new regulation. But
we do have complex regulation that has been
implemented quickly, a continued struggle
with legacy products and regulation, inefficient
regulation and regulation that doesn’t recognise
the innovation in technology. There were some
excellent recommendations around account
consolidation and improving product dashboards.
We expect to see the recommendation for a
majority of independent directors to be responded
to sooner rather than later. We will also see an
early response to raising the education standards
of financial advisors and the review of the
definition of ‘general advice’. Our regulators will
be given more ‘teeth’, more funding and will be
made accountable. Finally, the unknown piece
at this time will be the response to the report’s
criticism of the generous tax concessions within
super. We know higher account balances in the
accumulation and post-retirement stage as well
as dividend imputation will be closely looked at as
part of the review of the tax system.
There is much to do and I ask for your support
and engagement.
Follow Pauline on Twitter @pvamos
Do you have something to say about
this article? Let us know. Email
superfunds@superannuation.asn.au
I firmly believe that
the only way we will
increase confidence
in the industry and
improve our credibility
with our political and
consumer stakeholders
is by lifting the lid on
every cost bucket. We
must be bold and we
must come up with the
solutions